UnitedHealth Group founder to retire from the board after more than 40 years
The founder of the company that became UnitedHealth Group is retiring from the health insurer’s board of directors, closing a 45-year tenure that started during the early days of HMOs and is ending with UnitedHealth ranked No. 5 on the Fortune 500 list of America’s largest companies.
Richard Burke established in the Twin Cities a business called Charter Med Inc. in 1974. Doctors at the Hennepin County Medical Society hired the company to handle claims processing and business functions at their health maintenance organization, a new type of health insurance at the time that was growing in popularity.
From there, the business grew over the decades to become the nation’s largest health insurer and Minnesota’s largest company by revenue. The Minnetonka-based health care giant expects this year to post revenue in excess of $300 billion.
Burke was first named to the company’s board in 1977. He’s scheduled to retire as of UnitedHealth’s annual meeting on June 6.
“As a founder and long-time leader of UnitedHealth Group, Richard Burke has had an unmatched and positive impact on our company and American health care,” Stephen Hemsley, the chairman of the UnitedHealth Group board of directors, said in a statement. “On behalf of the Board and our 350,000 employees, we express our deep gratitude to Richard for the vision, service and guidance he provided throughout the years.”
Also retiring from the board is Gail Wilensky, who has served as a director since 1993. Wilensky is a health economist and senior fellow with the international health foundation Project HOPE.
“We are deeply grateful to Mr. Burke and Dr. Wilensky for their leadership,” the company said Friday in a proxy statement filed with shareholders.
“We benefited greatly from their insights, experience, and guidance. The board continues to assess its composition to ensure that it has the balance of skills and operating experience needed to oversee long-term strategy and provide effective oversight.”
A company spokesman said Burke was not available for an interview.
UnitedHealth Group is arguably the most prominent legacy of Minnesota’s leading role in the development of HMOs. It was a new approach to health insurance nurtured during the 1960s and ’70s by Dr. Paul Ellwood at a Twin Cities think tank called InterStudy.
Burke worked as a health analyst at InterStudy, which promoted the idea that HMOs could improve quality while lowering the cost of health care by changing the way doctors and hospitals got paid. His company incorporated as the for-profit United HealthCare in 1977 and quickly grew by managing and acquiring regional HMOs across the country.
Burke was the company’s chief executive until stepping down in 1987, a few months after he resigned as CEO of Minnesota’s largest HMO — a nonprofit called Physicians Health Plan that was a predecessor to Minnetonka-based Medica.
In a bitter public dispute, doctors had accused Burke of having a conflict of interest in running both the HMO and United HealthCare, which provided management services. Burke insisted it was his own idea to leave the HMO, downplaying the controversy and saying he needed to focus on running his company.
When Burke announced he would step down as United’s CEO, he agreed to sell almost half his stock to the New York investment firm Warburg, Pincus Capital Co., which helped orchestrate a financial turnaround at United.
Burke remained on the board at the company, which took the name UnitedHealth Group in 1998. By that point, the business had expanded beyond HMO coverage to other types of health insurance and included a division for health care services that’s now known as Optum.
After the removal in 2006 of chief executive William McGuire over a stock-option scandal, Burke stepped in as chairman of the board and held the position until 2017 when Hemsley, who had been the company’s CEO for more than a decade, became executive chairman.
Burke was named as the board’s lead independent director and held the position until October, when he was succeeded by board member Michele Hooper.
In November, UnitedHealth Group named to the board Paul Garcia, the retired chairman and chief executive of a publicly traded company that sells electronic payment processing services.
UnitedHealth Group’s proxy statement shows that Burke, as of earlier this month, held more than 1.37 million shares of the company’s stock. The trading price at about 9 a.m. Tuesday was $523.10 per share.
